Cogent Communications Reports Second Quarter 2014 Results and Increases Regular Quarterly Dividend on Common Stock

   Cogent Communications Reports Second Quarter 2014 Results and Increases
                  Regular Quarterly Dividend on Common Stock

PR Newswire

WASHINGTON, Aug. 7, 2014

WASHINGTON, Aug. 7, 2014 /PRNewswire/ --

Financial and Business Highlights

  oService revenue for Q2 2014 of $94.6 million – an increase of 10.3% from
    $85.8 million for Q2 2013 and an increase of 1.8% from $92.9 million for
    Q1 2014
  oCogent approves payment of its regular quarterly dividend of $0.30 per
    common share to be paid on September 19, 2014 to shareholders of record on
    August 29, 2014

       oThe third quarter 2014 per share regular dividend of $0.30 represents
         a 114% increase from the third quarter 2013 regular dividend of $0.14
         per share and an increase of 77% from the second quarter 2014 regular
         dividend of $0.17 per share

  oUnder Cogent's return of capital program, Cogent purchased 522,000 shares
    of its common stock for $17.9 million during Q2 2014 at an average price
    of $34.27 per share
  oCogent's board approves an additional $50.0 million under its stock
    buyback program
  oEBITDA, as adjusted, for Q2 2014 of $33.5 million – an increase of 13.0%
    from $29.6 million for Q2 2013 and an increase of 4.3% from $32.1 million
    for Q1 2014
  oEBITDA, as adjusted, margin increased 90 basis points from 34.5% for Q2
    2013 to 35.4% for Q2 2014 and increased 80 basis points from 34.6% for Q1
    2014
  oLegal fees included in SG&A and associated with defending net neutrality
    increased by $1.1 million from Q2 2013 to Q2 2014
  oCogent issued $200.0 million of senior unsecured notes and repaid its
    $92.0 million of convertible notes at par
  oCash and cash equivalents were $349.8 million at June 30, 2014
  oThere were 2,057 buildings on the Cogent network at the end of Q2 2014
  o43,287 customer connections were on the Cogent network at the end of Q2
    2014 – an increase of 16.8% from 37,057 customer connections at the end of
    Q2 2013 and increase of 3.2% from 41,947 customer connections at the end
    of Q1 2014

Cogent Communications Holdings, Inc. (NASDAQ: CCOI) today announced service
revenue of $94.6 million for the three months ended June 30, 2014, an increase
of 10.3% from $85.8 million for the three months ended June 30, 2013 and an
increase of 1.8% from $92.9 million for the three months ended March 31,
2014. The impact of foreign exchange positively impacted service revenue
growth from Q2 2013 to Q2 2014 by $0.7 million and positively impacted service
revenue growth from Q1 2014 to Q2 2014 by $0.1 million. On a constant
currency basis, service revenue grew by 9.5% from Q2 2013 to Q2 2014 and grew
by 1.7% from Q1 2014 to Q2 2014.

Cogent Communications Logo.

On-net service is provided to customers located in buildings that are
physically connected to Cogent's network by Cogent facilities. On-net revenue
was $70.4 million for the three months ended June 30, 2014; an increase of
12.3% over $62.7 million for the three months ended June 30, 2013 and an
increase of 1.9% over $69.1 million for the three months ended March 31, 2014.

Off-net customers are located in buildings directly connected to Cogent's
network using other carriers' facilities and services to provide the last mile
portion of the link from the customers' premises to Cogent's network. Off-net
revenue was $23.9 million for the three months ended June 30, 2014; an
increase of 5.6% over $22.6 million for the three months ended June 30, 2013
and an increase of 1.5% over $23.5 million for the three months ended March
31, 2014.

Non-core services are legacy services, which Cogent acquired and continues to
support but does not actively sell. Non-core revenue was $0.4 million for the
three months ended June 30, 2014, $0.5 million for the three months ended June
30, 2013 and $0.4 million for the three months ended March 31, 2014.

Non-GAAP gross profit increased by 12.9% from $48.9 million for the three
months ended June 30, 2013 to $55.1 million for the three months ended June
30, 2014 and increased 1.7% from $54.2 million for the three months ended
March 31, 2014. Non-GAAP gross profit margin percentage was 58.3% for the
three months ended June 30, 2014, 56.9% for the three months ended June 30,
2013 and 58.3% for the three months ended March 31, 2014.

Earnings before interest, taxes, depreciation and amortization (EBITDA), as
adjusted, increased 13.0% from $29.6 million for the three months ended June
30, 2013 to $33.5 million for the three months ended June 30, 2014 and
increased 4.3% from $32.1 million for the three months ended March 31, 2014.
EBITDA, as adjusted, margin was 35.4% for the three months ended June 30,
2014, 34.5% for the three months ended June 30, 2013, and 34.6% for the three
months ended March 31, 2014.

Basic and diluted net income per share was $0.03 for the three months ended
June 30, 2014, $0.03 for the three months ended June 30, 2013 and $0.00 for
the three months ended March 31, 2014.

Total customer connections increased 16.8% from 37,057 as of June 30, 2013 to
43,287 as of June 30, 2014 and increased 3.2% from 41,947 as of March 31,
2014. On-net customer connections increased 17.4% from 31,876 as of June 30,
2013 to 37,411 as of June 30, 2014 and increased 3.0% from 36,306 as of March
31, 2014. Off-net customer connections increased 16.0% from 4,728 as of June
30, 2013 to 5,486 as of June 30, 2014 and increased 4.6% from 5,244 as of
March 31, 2014. Non-core customer connections were 390 as of June 30, 2014,
453 as of June 30, 2013 and 397 as of March 31, 2014.

The number of on-net buildings increased by 136 on-net buildings from 1,921
on-net buildings as of June 30, 2013 to 2,057 on-net buildings as of June 30,
2014 and increased by 33 on-net buildings from 2,024 on-net buildings as of
March 31, 2014.

Quarterly Dividend and Dividend and Stock Buyback Plan Increases Approved

On August 6, 2014, Cogent's board approved a dividend of $0.30 per common
share payable on September 19, 2014 to shareholders of record on August 29,
2014. The third quarter 2014 regular dividend of $0.30 per share represents a
114% increase from the third quarter 2013 regular dividend of $0.14 per share
and an increase of 77% from the second quarter 2014 regular dividend of $0.17
per share.

On August 6, 2014 Cogent's board approved an additional $50.0 million under
its stock buyback program to extend to February 2016. Approximately $9.3
million remained available under the previous stock buyback program; as a
result, there is a total of $59.3 million available under the current program.

During the quarter ended June 30, 2014 Cogent purchased 522,000 shares of its
common stock for $17.9 million at an average price per share of $34.27 under
Cogent's return of capital program. Under Cogent's return of capital program,
Cogent plans on returning additional capital to its shareholders each quarter
through either stock buybacks or a special dividend or a combination of stock
buybacks and a special dividend. The aggregate payment under this program
will total at least $10.5 million each quarter and this amount is in addition
to Cogent's regular quarterly dividend payments. Since the amount paid for
stock buybacks in the second quarter was more than $10.5 million Cogent will
not make a special dividend payment in the third quarter under the return of
capital program. The return of capital program is planned to continue until
Cogent's net debt to trailing twelve months EBITDA, as adjusted, ratio reaches
2.50.Cogent's net debt to trailing twelve months EBITDA, as adjusted, ratio
was 1.99 at June 30, 2014 and was 1.86 at March 31, 2014.

The payment of any future dividends and any other returns of capital will be
at the discretion of Cogent's board of directors and may be reduced,
eliminated or increased and will be dependent upon Cogent's financial
position, results of operations, available cash, cash flow, capital
requirements and other factors deemed relevant by Cogent's board of directors.

Conference Call and Website Information

Cogent will host a conference call with financial analysts at 8:30 a.m. (ET)
on August 7, 2014 to discuss Cogent's operating results for the second quarter
of 2014 and to discuss Cogent's expectations for full year 2014. Investors
and other interested parties may access a live audio webcast of the earnings
call in the "Events" section of Cogent's website at www.cogentco.com/events.
A replay of the webcast, together with the press release, will be available
on the website following the earnings call.

About Cogent Communications

Cogent Communications (NASDAQ: CCOI) is a multinational, Tier 1
facilities-based ISP. Cogent specializes in providing businesses with high
speed Internet access, Ethernet transport, and colocation services. Cogent's
facilities-based, all-optical IP network backbone provides services in 190
markets globally.

Cogent Communications is headquartered at 1015 31st Street, NW, Washington,
D.C. 20007. For more information, visit www.cogentco.com. Cogent
Communications can be reached in the United States at (202) 295-4200 or via
email at info@cogentco.com.

COGENT COMMUNICATIONS HOLDINGS,INC., AND SUBSIDIARIES
Summary of Financial and Operational Results

               Q1 2013    Q2 2013    Q3 2013    Q4 2013    Q1 2014    Q2 2014
Metric ($ in
000's, except
share and per
share data) –
unaudited
On-Net revenue $61,678    $62,693    $64,548    $66,032    $69,087    $70,409
 % Change
from previous  2.1%       1.6%       3.0%       2.3%       4.6%       1.9%
Qtr.
Off-Net        $22,309    $22,604    $22,767    $23,438    $23,498    $23,859
revenue
% Change from  3.1%       1.3%       0.7%       2.9%       0.3%       1.5%
previous Qtr.
Non-Core       $566       $506       $446       $389       $352       $355
revenue (1)
 % Change
from previous  -3.4%      -10.6%     -11.9%     -12.8%     -9.5%      0.9%
Qtr.
Service
revenue –      $84,553    $85,803    $87,761    $89,859    $92,937    $94,623
total
 % Change
from previous  2.3%       1.5%       2.3%       2.4%       3.4%       1.8%
Qtr.
Network
operations     $37,154    $36,950    $37,327    $38,288    $38,723    $39,491
expenses (2)
% Change from  -0.9%      -0.5%      1.0%       2.6%       1.1%       2.0%
previous Qtr.
Non-GAAP gross $47,399    $48,853    $50,434    $51,571    $54,214    $55,132
margin (2)
% Change from  5.0%       3.1%       3.2%       2.3%       5.1%       1.7%
previous Qtr.
Non-GAAP gross
margin         56.1%      56.9%      57.5%      57.4%      58.3%      58.3%
percentage (2)
Selling,
general and    $19,106    $19,215    $19,772    $20,937    $24,392    $24,380
administrative
expenses (3)
 % Change
from previous  10.4%      0.6%       2.9%       5.9%       16.5%      0.0%
Qtr.
Depreciation
and            $15,874    $15,900    $16,024    $16,562    $17,204    $17,301
amortization
expense
% Change from  -1.6%      0.2%       0.8%       3.4%       3.9%       0.6%
previous Qtr.
Equity-based
compensation   $2,514     $2,137     $2,061     $2,007     $2,006     $1,873
expense
% Change from  -0.7%      -15.0%     -3.6%      -2.6%      0.0%       -6.6%
previous Qtr.
Operating     $9,905     $11,601    $12,577    $12,065    $12,907    $14,309
income
% Change from  8.0%       17.1%      8.4%       -4.1%      7.0%       10.9%
previous Qtr.
Net income     $361       $1,607     $2,122     $52,599    $125       $1,208
Basic net
income per    $0.01      $0.03      $0.05      $1.14      $0.00      $0.03
common share
Diluted net
income per    $0.01      $0.03      $0.05      $1.10      $0.00      $0.03
common share
Weighted
average common 45,537,607 46,040,692 46,171,194 46,302,926 46,409,735 45,897,449
shares – basic
% Change from  0.1%       1.1%       0.3%       0.3%       0.2%       -1.1%
previous Qtr.
Weighted
average common 46,435,677 46,769,184 46,823,167 48,800,560 46,907,360 46,294,966
shares –
diluted
% Change from  2.1%       0.7%       0.1%       4.2%       -3.9%      -1.3%
previous Qtr.
EBITDA, as     $28,295    $29,638    $30,703    $31,548    $32,117    $33,483
adjusted (4)
 % Change
from previous  -0.9%      4.7%       3.6%       2.8%       1.8%       4.3%
Qtr.
EBITDA, as
adjusted       33.5%      34.5%      35.0%      35.1%      34.6%      35.4%
margin (4)
Net cash
provided by    $14,962    $22,703    $14,898    $29,288    $10,636    $28,395
operating
activities
% Change from  -53.7%     51.7%      -34.4%     96.6%      -63.7%     167.0%
previous Qtr.
Capital        $16,316    $12,455    $10,165    $10,095    $15,623    $15,985
expenditures
 % Change
from previous  58.6%      -23.7%     -18.4%     -0.7%      54.8%      2.3%
Qtr.
Customer
Connections –
end of period
On-Net         30,914     31,876     33,310     34,671     36,306     37,411
 % Change
from previous  3.5%       3.1%       4.5%       4.1%       4.7%       3.0%
Qtr.
Off-Net        4,591      4,728      4,886      5,088      5,244      5,486
% Change from  2.8%       3.0%       3.3%       4.1%       3.1%       4.6%
previous Qtr.
Non-Core (1)   463        453        443        415        397        390
 % Change
from previous  -1.7%      -2.2%      -2.2%      -6.3%      -4.3%      -1.8%
Qtr.
Total          35,968     37,057     38,639     40,174     41,947     43,287
 % Change
from previous  3.3%       3.0%       4.3%       4.0%       4.4%       3.2%
Qtr.
Other – end of
period
Buildings      1,890      1,921      1,955      1,990      2,024      2,057
On-Net
Employees      619        633        673        706        724        760
(1) Consists of legacy services of companies whose assets or businesses were
acquired by Cogent, primarily including voice services (only provided in
Toronto, Canada).
(2) Network operations expense excludes equity-based compensation expense of
$155, $126, $114, $112, $113 and $114 in the three month periods ended March 31,
2013 through June 30, 2014, respectively. Non-GAAP gross margin represents
service revenue less network operations expense, excluding equity-based
compensation and amounts shown separately (depreciation expense).
(3) Excludes equity-based compensation expense of $2,359, $2,011, $1,947,
$1,895, $1,893 and $1,759 in the three month period ended March 31, 2013 through
June 30, 2014, respectively.
(4) See schedule of non-GAAP metrics below for definition and reconciliation to
GAAP measures. EBITDA, as adjusted, includes net gains (losses) from asset
related transactions of $2, $41, $914, $2,295 and $2,731 in the three months
ended March 31, 2013 and September 30, 2013, December 31, 2013, March 31, 2014
and June 30, 2014, respectively.

Schedule of Non-GAAP Measures

EBITDA and EBITDA, as adjusted

EBITDA represents net cash flows from operating activities plus changes in
operating assets and liabilities, cash interest expense and income tax
expense. Management believes the most directly comparable measure to EBITDA
calculated in accordance with generally accepted accounting principles in the
United States, or GAAP, is cash flows provided by operating activities.

EBITDA, as adjusted, represents EBITDA plus net gains (losses) on asset
related transactions. The Company believes EBITDA, as adjusted, is a useful
measure of its ability to service debt, fund capital expenditures and expand
its business. EBITDA, as adjusted, is an integral part of the internal
reporting and planning system used by management as a supplement to GAAP
financial information. The Company also believes that EBITDA is a frequently
used measure by securities analysts, investors, and other interested parties
in their evaluation of issuers.

EBITDA and EBITDA, as adjusted, are not recognized terms under GAAP and
accordingly, should not be viewed in isolation or as a substitute for the
analysis of results as reported under GAAP, but rather as a supplemental
measure to GAAP. For example, EBITDA is not intended to reflect the Company's
free cash flow, as it does not consider certain current or future cash
requirements, such as capital expenditures, contractual commitments, and
changes in working capital needs, interest expenses and debt service
requirements. The Company's calculations of EBITDA and EBITDA, as adjusted,
may also differ from the calculation of EBITDA and EBITDA, as adjusted, by its
competitors and other companies and as such, its utility as a comparative
measure is limited.

COGENT COMMUNICATIONS HOLDINGS,INC., AND SUBSIDIARIES
EBITDA, as adjusted, is reconciled to cash flows provided by operating
activities in the table below.

                             Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

                                                                 
($ in 000's) – unaudited
Net cash flows provided by   $14,962  $22,703 $14,898 $29,288 $10,636 $28,395
operating activities
Changes in operating assets  5,365    (1,446) 6,771   (8,158) 9,048   (10,061)
and liabilities
Cash interest expense and    7,966    8,381   8,993   9,504   10,138  12,418
income tax expense
Gains on asset related       2        -       41      914     2,295   2,731
transactions
EBITDA, as adjusted          $28,295  $29,638 $30,703 $31,548 $32,117 $33,483



Impact of foreign currencies ("constant currency" impact) on change in
sequential quarterly service revenue

($ in 000's) – unaudited                                  Q2 2014
Service revenue, as reported – Q2 2014                    $94,623
Impact of foreign currencies on service revenue           (70)
Service revenue - Q2 2014, as adjusted (1)               $94,553
Service revenue, as reported – Q1 2014                    $92,937
Constant currency increase from Q1 2014 to Q2 2014 -
(Service revenue,                                         $1,616
as adjusted for Q2 2014 less service revenue, as reported
for Q1 2014)
Percent increase (Constant currency increase from Q1 2014
to Q2 2014                                                1.7%
divided by service revenue, as reported for Q1 2014)
(1) Service revenue, as adjusted, is determined by translating the service
revenue for the three months ended June 30, 2014 at the average foreign
currency exchange rates for the three months ended March 31, 2014. The Company
believes that disclosing quarterly revenue growth without the impact of
foreign currencies on service revenue is a useful measure of revenue growth.
Service revenue, as adjusted, is an integral part of the internal reporting
and planning system used by management as a supplement to GAAP financial
information.



Impact of foreign currencies ("constant currency" impact) on change in prior
year quarterly service revenue

($ in 000's) – unaudited                                   Q2 2014
Service revenue, as reported – Q2 2014                     $94,623
Impact of foreign currencies on service revenue            (653)
Service revenue - Q2 2014, as adjusted (2)                $93,970
Service revenue, as reported – Q2 2013                     $85,803
Constant currency increase from Q2 2013 to Q2 2014 -
(Service revenue, as                                       $8,167
adjusted for Q2 2014 less service revenue, as reported for
Q2 2013)
Percent increase (Constant currency increase from Q2 2013
to Q2 2014 divided                                         9.5%
by service revenue, as reported for Q2 2013)
(2) Service revenue, as adjusted, is determined by translating the service
revenue for the three months ended June 30, 2014 at the average foreign
currency exchange rates for the three months ended June 30, 2013. The Company
believes that disclosing quarterly revenue growth without the impact of
foreign currencies on service revenue is a useful measure of revenue growth.
Service revenue, as adjusted, is an integral part of the internal reporting
and planning system used by management as a supplement to GAAP financial
information.

Net debt to trailing 12 months EBITDA, as adjusted, ratio

Under Cogent's return of capital program Cogent plans on returning an
additional at least $10.5 million to its shareholders each quarter through
either stock buybacks or a special dividend or a combination of stock buybacks
and a special dividend. The aggregate payment under this program will total
at least $10.5 million each quarter and this amount is in addition to Cogent's
regular quarterly dividend payments. The program is planned to continue until
Cogent's net debt to trailing twelve months EBITDA, as adjusted, ratio reaches
2.50.Cogent's net debt to trailing twelve months EBITDA, as adjusted, ratio
was 1.86 at March 31, 2014 and 1.99 at June 30, 2014 as shown below.

($ in 000's) – unaudited              As of March 31, 2014 As of June 30, 2014
Cash and cash equivalents             $263,747             $349,835
Debt
Capital leases – current portion      8,121                8,341
Convertible notes – par value         91,978               -
Capital leases – long term            154,233              155,899
Senior unsecured notes                -                    200,000
Senior secured notes – par value      240,000              240,000
Total debt                            494,332              604,240
Total net debt                        230,585              254,405
Trailing 12 months EBITDA, as         124,006              127,851
adjusted
Total net debt to trailing 12 months  1.86                 1.99
EBITDA, as adjusted

Cogent's SEC filings are available online via the Investor Relations section
of www.cogentco.com or on the Securities and Exchange Commission's website at
www.sec.gov.





COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2014 AND DECEMBER 31, 2013

(IN THOUSANDS, EXCEPT SHARE DATA)
                                                 June30,       December31,
                                                 2014           2013
                                                 (Unaudited)
Assets
Current assets:
Cash and cash equivalents                        $   349,835    $    304,866
Accounts receivable, net of allowance for
doubtful accounts of $1,817 and $1,871,          33,505         30,628
 respectively
Prepaid expenses and other current assets        22,481         18,777
Total current assets                             405,821        354,271
Property and equipment, net                      353,663        341,193
Deferred tax assets - noncurrent                 50,122         50,861
Deposits and other assets - $447 and $448        13,181         8,776
restricted, respectively
Total assets                                     $   822,787    $    755,101
Liabilities and stockholders' equity
Current liabilities:
Accounts payable                                 $   16,969     $    14,098
Accrued liabilities                              34,754         31,465
Convertible senior notes - current portion, net  —              88,879
of discount of $3,099 (Note 3)
Current maturities, capital lease obligations    8,341          9,252
Total current liabilities                        60,064         143,694
Senior secured notes including premium of        244,835        245,423
$4,835 and $5,423, respectively
Senior unsecured notes                           200,000        —
Capital lease obligations, net of current        155,899        152,527
maturities
Other long term liabilities                      21,367         19,965
Total liabilities                                682,165        561,609
Commitments and contingencies:
Stockholders' equity:
Common stock, $0.001 par value; 75,000,000
shares authorized; 46,466,355 and                46             47
 47,334,218 shares issued and outstanding,
respectively
Additional paid-in capital                       480,794        508,256
Accumulated other comprehensive income —         1,630          2,136
foreign currency translation
Accumulated deficit                              (341,848)      (316,947)
Total stockholders' equity                       140,622        193,492
Total liabilities and stockholders' equity       $   822,787    $    755,101
COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND JUNE 30, 2013

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                                 ThreeMonths   ThreeMonths
                                                 Ended          Ended
                                                 June30,2014  June30,2013
                                                 (Unaudited)    (Unaudited)
Service revenue                                  $   94,623     $    85,803
Operating expenses:
Network operations (including $114 and $126 of
equity-based compensation expense,               39,605         37,076
 respectively, exclusive of depreciation
and amortization shown separately below)
Selling, general, and administrative (including
$1,759 and $2,011 of equity-based                26,139         21,226
 compensation expense, respectively)
Gains on equipment transactions                  (2,731)        —
Depreciation and amortization                    17,301         15,900
Total operating expenses                         80,314         74,202
Operating income                                 14,309         11,601
Interest income and other, net                   268            589
Interest expense                                 (13,790)       (10,216)
Income before income taxes                       787            1,974
Income tax benefit (provision)                   421            (367)
Net income                                       $   1,208      $    1,607
Comprehensive income:
Net income                                       $   1,208      $    1,607
Foreign currency translation adjustment          (44)           326
Comprehensive income                             $   1,164      $    1,933
Net income per common share:
Basic and diluted net income per common share    $   0.03       $    0.03
Dividends declared per common share              $   0.17       $    0.13
Weighted-average common shares - basic           45,897,449     46,040,692
Weighted-average common shares - diluted         46,294,966     46,769,184
COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND JUNE 30, 2013

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                                 SixMonths     SixMonths
                                                 Ended          Ended
                                                 June30,2014  June30,2013
                                                 (Unaudited)    (Unaudited)
Service revenue                                  $   187,560    $    170,357
Operating expenses:
Network operations (including $227 and $281 of
equity-based compensation expense,               78,442         74,385
 respectively, exclusive of depreciation
and amortization shown separately below)
Selling, general, and administrative (including
$3,651 and $4,370 of equity-based                52,423         42,691
 compensation expense, respectively)
Gains on equipment transactions                  (5,026)
Depreciation and amortization                    34,505         31,774
Total operating expenses                         160,344        148,850
Operating income                                 27,216         21,507
Interest income and other, net                   404            1,245
Interest expense                                 (25,092)       (20,084)
Income before income taxes                       2,528          2,668
Income tax provision                             (1,195)        (700)
Net income                                       $   1,333      $    1,968
Comprehensive income:
Net income                                       $   1,333      $    1,968
Foreign currency translation adjustment          (506)          (1,467)
Comprehensive income                             $   827        $    501
Net income per common share:
Basic and diluted net income per common share    $   0.03       $    0.04
Dividends declared per common share              $   0.56       $    0.25
Weighted-average common shares - basic           46,200,844     46,028,855
Weighted-average common shares - diluted         46,648,415     46,842,136
COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND JUNE 30, 2013

(IN THOUSANDS)
                                                 Sixmonths     Sixmonths
                                                 Ended          Ended
                                                 June30,2014  June30,2013
                                                 (Unaudited)    (Unaudited)
Cashflowsfromoperatingactivities:
Net income                                       $   1,333      $    1,968
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                    34,505         31,774
Amortization of debt discount and premium        2,555          3,193
Equity-based compensation expense (net of        3,878          4,651
amounts capitalized)
Losses (gains) - dispositions of assets and      (4,959)        123
other, net
Deferred income taxes                            772            204
Changes in operating assets and liabilities:
Accounts receivable                              (2,970)        (3,409)
Prepaid expenses and other current assets        (3,678)        (4,693)
Accounts payable, accrued liabilities and other  7,822          3,647
long-term liabilities
Deposits and other assets                        (227)          207
Net cash provided by operating activities        39,031         37,665
Cash flows from investing activities:
Purchases of property and equipment              (31,608)       (28,771)
Proceeds from dispositions of assets             92             2
Net cash used in investing activities            (31,516)       (28,769)
Cash flows from financing activities:
Dividends paid                                   (26,234)       (11,634)
Purchases of common stock                        (32,084)       —
Repayment of convertible senior notes            (91,978)       —
Net proceeds from issuance of senior unsecured   195,824        —
notes
Proceeds from exercises of stock options         301            737
Principal payments of capital lease obligations  (8,146)        (7,045)
Net cash provided by (used in) financing         37,683         (17,942)
activities
Effect of exchange rates changes on cash         (229)          (904)
Net increase (decrease) in cash and cash         44,969         (9,950)
equivalents
Cash and cash equivalents, beginning of period   304,866        247,285
Cash and cash equivalents, end of period         $   349,835    $    237,335
Supplemental disclosure of non-cash financing
activities:
Non-cash component of network equipment          $   4,900      $    —
obtained in exchange transactions
Capital lease obligations incurred               $   7,671      $    21,224



Except for historical information and discussion contained herein, statements
contained in this release constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements include, but are not limited to statements identified by words such
as "believes," "expects," "anticipates," "estimates," "intends," "plans,"
"targets," "projects" and similar expressions. The statements in this release
are based upon the current beliefs and expectations of Cogent's management and
are subject to significant risks and uncertainties. Actual results may differ
from those set forth in the forward-looking statements. Numerous factors
could cause or contribute to such differences, including future economic
instability in the global economy or a contraction of the capital markets
which could affect spending on Internet services and our ability to engage in
financing activities; the impact of changing foreign exchange rates (in
particular the Euro to USD and Canadian dollar to USD exchange rates) on the
translation of our non-USD denominated revenues, expenses, assets and
liabilities; legal and operational difficulties in new markets; the imposition
of a requirement that we contribute to the U.S. Universal Service Fund and
similar funds in other countries; changes in government policy and/or
regulation, including net neutrality rules by the United States Federal
Communications Commission and in the area of data protection; increasing
competition leading to lower prices for our services; our ability to attract
new customers and to increase and maintain the volume of traffic on our
network; the ability to maintain our Internet peering arrangements on
favorable terms; our reliance on an equipment vendor, Cisco Systems Inc., and
the potential for hardware or software problems associated with such
equipment; the dependence of our network on the quality and dependability of
third-party fiber providers; our ability to retain certain customers that
comprise a significant portion of our revenue base; the management of network
failures and/or disruptions; and outcomes in litigation as well as other risks
discussed from time to time in our filings with the Securities and Exchange
Commission, including, without limitation, our annual report on Form 10-K for
the fiscal year endedDecember 31, 2013 and our quarterly report on Form 10-Q
for the quarter ended June 30, 2014 to be filed with the Securities and
Exchange Commission. Cogent undertakes no duty to update any forward-looking
statement or any information contained in this press release or in other
public disclosures at any time.



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SOURCE Cogent Communications Holdings, Inc.

Website: http://www.cogentco.com
Contact: Cogent Contacts: For Public Relations: Travis Wachter, + 1 (202)
295-4217, twachter@cogentco.com; For Investor Relations: John Chang, + 1 (202)
295-4212, investor.relations@cogentco.com
 
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